AMENDMENT OF THE CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
On February 12, 2010, GreenShift’s Board of Directors approved an amendment to GreenShift’s Certificate of Incorporation to increase the authorized common stock from 10 billion to 20 billion shares. The Board approved the amendment in order to comply with GreenShift’s agreements with its senior creditor, YA Global Investments, L.P. (“YA Global”). The convertible debt instruments held by YA Global require that GreenShift maintain a sufficient number of shares of authorized common stock to enable conversion of the convertible debt issued by GreenShift to YA Global.
On February 12, 2010, the holder of a majority of the voting power of the outstanding voting stock gave its written consent to the amendment. The amendment will be filed and become effective approximately twenty days after this Information Statement is mailed to the shareholders.
At the February 12, 2010 Record Date, 7,950,481,840 of the currently authorized 10,000,000,000 common shares are issued and outstanding. During the past six months, the holders of GreenShift’s outstanding convertible debentures have converted into more than 7 billion shares of common stock. The Board of Directors anticipates that conversions will continue, and that the full 10,000,000,000 authorized shares will be outstanding in the foreseeable future. The effect of the amendment will be to increase the number of authorized shares of common stock, $0.0001 par value, from 10,000,000,000 to 20,000,000,000.
The Board of Directors and the majority shareholder have approved the increase in authorized common stock in order to provide GreenShift with flexibility in pursuing its long-term business objectives. The primary reason for the increase is the requirement contained in GreenShift’s agreements with YA Global to maintain a sufficient number of shares of authorized common stock to enable conversion of debt issued by GreenShift to YA Global. Additional reasons for the increase include:
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Management plans in the future to pursue opportunities to obtain the capital in order to fully implement GreenShift’s business plan. A reserve of both common and preferred shares available for issuance from time-to-time will enable GreenShift to entertain a broad variety of financing proposals.
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Management may utilize the additional shares in connection with corporate acquisitions, joint venture arrangements, or for other corporate purposes, including the solicitation and compensation of key personnel.
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There are additional outstanding debentures issued by GreenShift that are convertible, at the instance of the debt-holders, into GreenShift common stock.
Management has not entered into any commitment to issue any shares except upon conversion of the outstanding debentures. The following table shows the derivative securities currently outstanding that may result in the issuance of more than 1,000,000 common shares:
Derivative Security Creditor Issue Date Original Principal Outstanding Principal Shares Issuable
A&R Convertible Deb. YA Global Investments, L.P. 12/9/2009 $42,727,603 $42,110,876 116,974,655,555(1)
Related Party Debenture Minority Interest Fund (II), LLC 12/31/2008 $4,706,143 $4,706,143 13,072,619,444(2)
Options 996,629(3)
Various 130,047,275,000
(1)The principal amount and accrued interest on the A&R Convertible Debentures issued to YA Global Investments, L.P. (“YA Global”), are convertible by the holder into common stock at a conversion rate equal to 90% of the average closing market price of the Company’s common stock for the 20 days prior to conversion. The A&R Convertible Debentures accrue interest at 6% per annum and are due March 31, 2011. At a conversion rate of $0.0004 on February 11, 2010, the A&R Convertible Debentures could be converted into 116,974,655,555 common shares.
(2)The principal amount and accrued interest on the unsecured Related Party Debenture issued to Minority Interest Fund (II), LLC (“MIF”), is convertible by the holder into common stock at a conversion rate equal to 90% of the average closing market price of the Company’s common stock for the 20 days prior to conversion. The Related Party Debenture accrues interest at 20% per annum and is due December 31, 2010. The Related Party Debenture includes a number of debentures issued between December 31, 2008 and January 30, 2009. At a conversion rate of $0.0004 on February 11, 2010, the Related Party Debentures could be converted into 13,072,619,444 common shares.
(3)There are employee stock options that were issued and unexercised for 996,629 shares with a weighted average exercise price of $5.00. |
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